Finance 341, Chapter 5, Exam practice/ Study guide

(#6) What's the future value of a 5%, 5-year ordinary annuity that pays $800 each year? If this was an annuity due, what would its future value be?

FVA5=$4,420.51; FVA5due=$4,641.53

(#10) Find the following values. Copmpounding/Discounting occurs annually. a. An initial $200 compounded for 10 years at 4% b. An initial$200 compounded for 10 years at 8% c. The present value of $200 due in 10 years at 4% d. The present value of $1,870 due in 10 years at 8% and at 4% e. Define present value. How are present values affected by interest rates?

a. $296.05 b.$ c.$ d.$$

(#4) If you deposit money today in an account that pays 4% annual interest, how long will it take to double your money?

N= 17.67

(#8) You want to buy a car, and a local bank will lend you $40,000. The loan will be fully amortized over 5 years (60 months), and the nominal interst rate will be 8% with interest paid monthly. What will be the monthly loan payment? What will be the loan's EAR?

PMT= $811.06; EAR= 8.30%

(#2) What is the present value of a security that will pay $29,000 in 20 years is securities of equal risk pay 5% annuity?

pv= $10,929.80